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the Hyatt International contracts, relied upon by Dr. Mooney and
Mr. Burt. Mr. Burt and Dr. Mooney did not give consideration to
the role played by HHK or HS in the development, implementation,
and monitoring of the Hyatt International group policies and
standards or in otherwise enhancing the performance of the hotels
they supervised.
Overall, by means of the deficiency notices, respondent
determined $49,337,269 of allocations attributable to HIC.
Comparatively, BVS’s opinion recommends just over $30 million
attributable to HIC. BVS analyzed the relationship between HIC
and its management subsidiaries and concluded that a profit-split
methodology should be used in constructing its recommendations.
Petitioners’ expert, Ernst & Young, concluded that management
fees were earned by the subsidiary that received them. Because
of the approximate $2.5 million catchup overhead charge in 1983,
they recommended that no allocations were needed for support
services from HIC. Ernst & Young also concluded that allocations
were unnecessary for IPS’s services, due to its limited influence
in the years involved, or for chain services, as costs were
covered and any profit on chain services should accrue to HCS, a
subsidiary of HHK.
Ultimately, we hold that HHK and HS received the benefit of
certain services from HIC (as discussed infra) and that
allocation of income is necessary. The reports, prior to the
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